1. In 1975 the price of a new house was $50,000. In 2015 the price of...

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1. In 1975 the price of a new house was $50,000.
In 2015 the price of a new house is $300,000.
How much has the price of housing increased over the entire 40years in percentage terms?
A.5.00%
B.600%
C.4.58%
D.500%
2. The current cost of tuition is $12,000 per year.
The cost of tuition is rising at 5.00% per year.

At this rate of inflation, how much will the cost of tuition be in20 years?
A.$31,840
B.$12,348
C.$31,203
D. $12,600
E.$32,158
F. $12,726

Answer & Explanation Solved by verified expert

4.4 Ratings (621 Votes)

Answer 1
Price of new house in 1975=   $50,000
Price of new house in 2015 =   $300,000
Time in years = 2015 - 1975=   40

Price increase rate (inflation rate) formula = ( (Value in 2015/Value in 1975)^(1/no. of years)) -1
=((300000/50000)^(1/40)) - 1
=0.04581238649   or 4.58%

So, Answer is C 4.58%

Answer 2
Current Cost of tution =   12000   per year
inflation rate =   5%   per year
Time in years =   20
Future cost = current cost*(1+inflation rate)^no of years
=12000*(1+5%)^20
=31839.57246

So , cost of tution in 20 years is $31840. Answer A.

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1. In 1975 the price of a new house was $50,000.In 2015 the price of a new house is $300,000.How much has the price of housing increased over the entire 40years in percentage terms?A.5.00%B.600%C.4.58%D.500%2. The current cost of tuition is $12,000 per year.The cost of tuition is rising at 5.00% per year.At this rate of inflation, how much will the cost of tuition be in20 years?A.$31,840B.$12,348C.$31,203D. $12,600E.$32,158F. $12,726